For AOL And Yahoo, Will Opening Up Their Portals Be Enough?

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Earlier this month both AOL and Yahoo redesigned their home pages to include more links to outside services. The new AOL homepage features prominent links to Gmail, Hotmail, and Yahoo Mail, as well as to bookmarks leading elsewhere, and integration with Facebook and MySpace. Yahoo’s new home page, which it is still bucket testing selectively, also includes more directlinkstoother e-mail providers, social networks, and a new left-hand channel strip that can be modeified by suers to include links to their favorite Web services. For YAhoo, it is part of its strategy to become the preimier starting point on the Web, no matter where people wan to go. But in an era when the destination site is quickly dying, if not already dead (with information pushed and personalized to you via services like Facebook, FriendFeed, and Twitter), will these redesigns be enough?

In a note today, Wall Street analyst Douglas Anmuth (formerly of Lehman Brothers, now of Barclays Capital) is not so sure. He writes:

Fundamentally, we believe these actions are necessary steps, but we question if they will make the portals more relevant in the context of a constantly fragmenting Web, and we certainly do not expect them to have an immediate impact on financials.

We believe embracing openness principals by Yahoo! and AOL are the right steps strategically, but the key is whether both properties can improve their monetization of traffic given the current challenging display ad market.

Given that AOL and Yahoo are seriously exploring a combination, at least they are on the same page strategically. But it kind of makes you wonder how much difference the more open strategies pursued by both portals will make. Especially in this market.